Reserve Bank of India announces auction of State Government Securities worth 14,500 crore rupees
Why it matters
The upcoming auction represents a significant fiscal move by various state governments to raise capital through the debt market. Uttar Pradesh is set to raise the highest amount at 4,500 crore rupees, which includes a re-issue of the 7.67% SGS 2041. Kerala and Madhya Pradesh follow with 1,800 crore and 2,800 crore rupees respectively. These securities are governed by the Government Securities Act, 2006, and serve as eligible investments for banks to maintain their Statutory Liquidity Ratio (SLR) under Section 24 of the Banking Regulation Act, 1949.
For individual investors, the RBI has streamlined access through the Retail Direct portal, allowing for non-competitive bids. Allotment to individuals is restricted to a maximum of 1% of the notified amount per stock. The results, to be announced on April 28, will determine the yield or price of the new stocks. The interest on these stocks will be paid half-yearly, with the first payment cycle ending October 29. This scheduled borrowing is crucial for state-level budget financing and provides a benchmark for long-term interest rates in the domestic market.
| State | Amount (₹ Crore) | Tenor (Years) |
|---|---|---|
| Uttar Pradesh | 4,500 | 10 & 15 (Re-issue) |
| Madhya Pradesh | 2,800 | 08 & 22 |
| Kerala | 1,800 | 23 |
| Bihar | 2,400 | 09 & 15 (Re-issue) |
Glossary
Statutory Liquidity Ratio (SLR): The minimum percentage of deposits that a commercial bank has to maintain in the form of liquid cash, gold, or other securities approved by the RBI.
E-Kuber: The Core Banking Solution (CBS) platform of the Reserve Bank of India which supports various banking and sovereign debt operations.